europe Articles

EBA Publishes Final Guidelines on Sound Remuneration Policies under CRD IV

The European Banking Authority (EBA) published its final guidelines on sound remuneration policies under CRD IV (Guidelines) on 21 December 2015. Following a strong industry response to the first draft of the Guidelines that was published in March 2015, there have been changes to the original text. Most notably, proportionality is not addressed in the Guidelines; instead a separate Opinion that is addressed to the European Commission (EC), European Parliament and Council has been published. The EBA’s Opinion on proportionality confirms that the EBA will provide guidance to the EC on potential changes to the text of the Directive to clarify how proportionality is to apply.

McLagan Alert: The UK Decides to Leave the EU

On 23 June the UK voted to leave the European Union (EU). This historic decision is creating near-term volatility in the capital markets, but it is important to note that the full impact of this decision for the UK and European financial services sector will unfold over a period of at least two years as the UK negotiates the terms of the exit.

EBA Consults on Draft Remuneration Guidelines for Sales Staff

On December 22 2015, the European Banking Authority (EBA) published a consultation paper on its Draft Guidelines on remuneration policies and practices for staff offering and providing retail banking products and services.

EBA Consultation on Guidelines on Sound Remuneration Policies

On 4 March 2015, the European Banking Authority (EBA) published a consultation paper on draft guidelines on sound remuneration policies. These guidelines seek to clarify how firms and regulators should interpret the remuneration rules in CRD IV. The proposed text updates guidelines previously published by the Committee of European Banking Supervisors (CEBS – the forerunner to the EBA) about pay regulation under CRD III.

The Changing Face of Variable Pay Schemes in GCC Consumer Banking Industry

Over the last couple of years, incentive/commission schemes in the Gulf Cooperation Council (‘GCC’) have gained a lot of traction amongst local Consumer Banks. In some countries, banks have introduced incentive schemes in order to reduce the overall compensation expense which is derived from their bank-wide bonus pools. Though, most banks generally pursue the overarching concept of a ‘Pay-for-Performance’ philosophy, when introducing such schemes.

Changing Times: Quantifying Research

Research continues to form an integral part of a firm’s product offering, although, like all functions, it has come under intense pressure over the past 4-5 years as the dip in firm-wide revenues has pressured margins. While the economics of providing research improved in 2013, driven by a rebound in equities revenue, firms are still considering whether to categorize research as a revenue producing function or a cost centre.

Changing Banking for Good: UK Parliamentary Commission's Remuneration Proposals

This McLagan Alert summarises the key points relating to remuneration from the final report of the UK's Parliamentary Commission on Banking Standards (PCBS or the Commission), published last week. It considers possible implications, scope and the process that follows the report's publication.

Bonus Cap: Capital Requirements Directive IV

Negotiators for the European Parliament and European Council reached a provisional agreement on 27 February 2013 on changes to the Capital Requirements Directive (CRD IV), primarily focused on moves towards the implementation of Basel III. Included in these proposals is the cap on bank bonuses that European Union (EU) politicians have been pushing for. There are still details to be fleshed out; the agreement needs to be set down in writing, EU finance ministers and the European Parliament must ratify the final rules, and aspects of implementation require the European Banking Authority (EBA) to develop new guidance. In the meantime, this Alert summarises the main terms and considers some of the likely impacts.

Sales Incentives and the UK FSA's Guidance: More than Just a Reactive Review is Needed

This Alert summarises the final FSA guidance on the risk to customers from financial incentives; outlines the minimum that firms are required to do; sets out what firms have done to date; and suggests how to makes these changes as effective as possible.

UK Financial Services Authority Update on the Remuneration Code

​In an effort to streamline and focus the supervisory process, the UK's Financial Services Authority (FSA) recently issued guidance on the proportionality structure in its Remuneration Code. The requirements that were previously structured as four Tiers based on either assets or regulatory capital have been redrafted in a new three-level system based solely on the firm's total assets.

Proposed UK Disclosure Rules: Top Eight Executives below the Board

The UK Treasury is consulting on proposed regulations to require larger banks to publish anonymous remuneration details for each of the top eight UK-based executives below the board “to enhance the transparency of the relationship between risk and reward for the highest paid senior executives in the largest banking institutions.”  The consultation runs until 14 February 2012. 

Update on CRDIII Implementation: Part 2 Convergence of EU Regulations

On 10 December 2010, the Committee of European banking Supervisors (CEBS) published the final guidelines on implementation of the Capital Requirements Directive (CRD)III remuneration regulations in the EU and on 17 December, the UK Financial Services Authority (FSA) published the associated Revised Remuneration Code.

Update on Capital Requirements Directive III (CRDIII) Remuneration Guidelines

The long awaited guidance from the Committee for European Banking Supervisors (CEBS) was published 8 October 2010. The guidelines are designed to help institutions and regulators interpret and implement the remuneration aspects of the EU CRD III legislative resolution on the implementation of the Basel III agreement on solvency. In short, these guidelines will direct institutions on how they can compensate a significant number of their most crucial employees. As was anticipated, the guidelines are strict on the conditions and structure of variable pay from a risk management and solvency perspective.

Aon Names Ray Everett Global President of McLagan

Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, today announced it has named Raymond Everett as global president of McLagan. In this role, Everett is responsible for leading a team of experts who provide compensation, performance and talent intelligence to companies in the financial services and insurance industries. He leads the McLagan executive committee and is a member of Aon’s Talent, Rewards & Performance executive committee.

Banking Standards Board: Doing Well While Also Doing Good

In the wake of the 2008 financial crisis, the UK financial services industry shifted its focus to restoring trust and shaping a more resilient and consumer-oriented industry. Considered the worst economic disaster since the Great Depression, the crisis suggested that banks had failed to appropriately serve customers, as well as the public good. Although the UK banking sector holds great importance to the overall economy and society, regaining trust in the industry is an ongoing struggle that requires sustained improvements to leadership and culture.

Australian Regulators “BEAR” Down on Accountability

The Banking Executive Accountability Regime (BEAR) is scheduled to go live in Australia on July 1, 2018. This marks the Australian government’s latest response to improving accountability in the financial services industry. The new regulation aims to raise the bar for risk management and corporate governance standards and outline consequences for both institutions and responsible individuals who breach the required standards of the regulation.

The Impact of Brexit on Talent and Rewards in Germany

Banks, insurers, and other financial services institutions are in a race against the clock to clinch licenses and bolster their continental workforces before Britain leaves the EU. Without a comprehensive trade deal between the UK and EU that covers financial services, companies risk having no replacement for lost passporting rights, which currently allow firms to serve clients across the bloc.

Why It Pays to Find Your Balance

Between the changing regulatory environment and evolving customer demands, wealth managers are realizing that incentive plans must reflect more than just shareholders’ needs, leading to the use of a broader set of metrics, often in a balanced scorecard approach. This article outlines how to strike the right balance between multiple quantitative and qualitative metrics to ensure firms remain competitive, create desired outcomes, and are in line with regulatory principles when creating a well-functioning incentive scheme.

The Spotlight: Mark Miles, Partner, European Wealth Management

Mark Miles is the head of wealth management in Europe. He leads the development and delivery
of market leading business improvement consulting, leveraging the firm’s proprietary data
and unrivalled insight of client experience, pay & productivity, and talent from its Scorpio and
McLagan wealth consulting businesses.

The Spotlight: Anthony Poole, Partner, European Asset Management

Anthony Poole leads McLagan’s European asset management practice and is based in London. Since joining the firm in 2006, Anthony has been responsible for providing performance and rewards consulting services to investment management organizations. His work includes compensation plan design and analytics across all asset management business functions, as well as regulatory assessment..